Blog: why aren’t more people talking about the Scottish Child Payment?

18th September 2023

by Liz Ditchburn

The Scottish Child Payment is a bold policy intervention with cross-party backing targeting child poverty and its long-term consequences. This blog aims to stimulate discussion about this Scottish policy innovation and calls for investment and action to ensure we learn from its implementation, generating evidence about what works that will be useful in Scotland, the rest of the UK and beyond.

About the Author

Liz Ditchburn CB has more than three decades of experience in the UK civil service and devolved administrations in both domestic and international settings. Most recently, she was Director General for Economy for the Scottish Government, leading on all aspects of the economy and the drive towards net zero in Scotland. Although at the Scottish Government during the development of the Scottish Child Payment she has not worked on the policy itself.

Previously, she was the Department for International Development’s (now Foreign, Commonwealth and Development Office) Policy Director and its first Value for Money Director. Across her executive career she has worked to integrate economic, social and environmental change to secure better outcomes for people, place and planet.  Liz is now an Honorary Professor at the University of Glasgow, a Non-Executive Director of the Net Zero Technology Centre and a Trustee of NESTA.

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I’ve lost track of the number of times I’ve mentioned the Scottish Child Payment to colleagues and friends based elsewhere in the UK (even some involved in public policy work) and been told they’ve never heard of it. The next reaction when I describe the level and scale of this initiative, is “Wow! That’s big!”. It is indeed.

For those unfamiliar with this new payment to low income families in Scotland (broadly those in receipt of Universal Credit or similar), here are some headlines and a brief timeline:

• First payments began in February 2021 at the rate of £10 a week for each child under 6.

• Doubling of the payment to £20 a week per child was announced in November 2021 with payments at that level starting from April 2022. (In advance of the expected extension of the eligibility to under 16s, a system of bridging payments was put in place for children between 6 and 16 – in effect advancing the formal roll out)

• Payment increased to £25 a week per child and eligibility was formally extended to under 16s in November 2022.

What makes the Scottish Child Payment remarkable and worthy of more debate inside and outside Scotland?  And why does it matter beyond Scotland?

Firstly, impact for individuals: the numbers above bear repeating. If you are a low income family in Scotland, on top of UK child benefit and any other benefit, you can receive £25 per week for each child under 16. There are no limits to the number of children an eligible family can claim for.   To get a sense of impact for a typical family, a family with 3 children will receive £3,900 a year.  That’s a significant addition to a low income household. And it’s each year and every year, not a one-off boost.  At a societal level, modelling puts the impact on child poverty rates at a reduction of around 5% 

Secondly, coverage: when the payment began in 2021, Social Security Scotland estimated it was being paid for 106,000 children.  With the extension to under 16s, around four times more children could be covered. The Scottish Fiscal Commission (SFC) produced costings estimates when the extension to the scheme was proposed, calculating that around 41% of under 6s and 48% of over 6s would be eligible.  This translates roughly into an estimated 400,000 children being eligible (with actual coverage dependent on uptake). The latest statistics just published by Social Security Scotland show payments are being made in respect of just over 316,000  children.

Thirdly, scale:  this is a fiscal anti-poverty intervention at scale, not a small tweak at the margins.   Earlier this year, the Institute of Fiscal Studies produced some budget analysis for the Scottish Parliament during budget deliberations showing that tax and benefit changes are in effect a significant transfer from richer households to poorer households with children.   Graphics  in their published paper, analysis of Scottish tax and benefit reforms, are well worth a look. 

Fourthly, cost.  The SFC costed the Scottish Child Payment for 2023/24 at £405m.   The recent actual figures for Q1 23/24 published by the Scottish Government confirm this scale with £104.1m spent in the quarter.  To help put these figures into context for readers elsewhere in the UK, a very rough guide is to multiply by 10 to get an idea of an equivalent whole of UK scale – so such an initiative covering all the UK might be in the order of £4.2bn.

Fifthly, political consensus and societal attitudes:  both the introduction of the Scottish Child Payment and its increase to £25 per week per child has been marked by a pretty strong level of political and cross-party consensus.   Indeed, some of the challenge that the Scottish Government received (and still receives) in debates was along the lines of why not go further, faster, why not increase the rate beyond £25? That there is consensus around the idea that child poverty is a bad thing is not surprising; that there is agreement that direct cash transfers to families are an important part of the answer and affordable is more remarkable. 

Sixthly, the tone of the debate:  coverage and discussion around the payment have been mercifully free of language around “handouts” or whether people are “deserving” or not. When cash transfers first began to be adopted in an international aid setting, concerns about whether poor people could be trusted to do sensible things with cash were never far away. The evidence since has shown pretty consistently that given cash, people in poverty use it well.  (The Overseas Development Institute (ODI) has published a great review of the evidence around cash transfers, Cash transfers: what does the evidence say? | ODI: Think change.

What do we know so far about the impact of the Scottish Child Payment – does the evidence suggest that it is going to have the impacts the Scottish Government expects?   

The diagram below shows the short, medium and long term changes that the designers of this policy are looking for – the “logic model”. 

Source: Scottish Child Scottish Child Payment Interim Evaluation

The only published evaluation I’ve seen so far (please send links to any others if you know of them) is from March 2022: the interim evaluation published by the Scottish Government. It was conducted early in the life of the Scottish Child Payment and therefore necessarily focused on the immediate and short-term outcomes, and critically, refers to the period when the payment level was at £10. Nevertheless, it provides some interesting glimpses and areas for deeper exploration.

There was broadly positive evidence supporting some of the short-term outcomes: reduced money-related stress, increased child-related spend, children able to participate in social and educational opportunities and reduced pressure on household finances, with less clear evidence for an improved position of main carers within households. The findings on children’s opportunities and stress are really interesting. Finding out whether and how cash transfers can support better learning outcomes for children rather than just having a direct impact on material poverty is one of the big questions for cash transfers policies.  And we know that persistent stress can have a pervasive impact on long-term health.

These two quotes in the interim evaluation are compelling and provide a glimpse as to how this might be impacting:

 “[Scottish Child Payment] did lessen my worries quite a lot to be honest.  Money's the one thing I'm always stressing about, always thinking about, always worrying about. It was a relief to have that extra boost.  (Parent 22, age 18-24, care-experienced, 3+ children)  

[Scottish Child Payment helps with] not having to stress out because you know it’s coming. When I get stressed, I don’t sleep. I don’t deal well with stress. I don’t want the kids to see me stressed. (Parent 18, age 25-34, single parent)”    

Will these findings still hold at the higher level of £25, under the changed economic context and even sharper cost of living challenges?

The interim evaluation includes lots of detail around the application process and uptake.  As a “passported” benefit (that is one that you’re entitled to because you already receive another benefit), applications should be more straightforward and administratively less costly than standalone benefits.   

However, this also brings with it often complex interactions with other parts of the tax and benefit system and a particular challenge for policy makers when different parts of the tax and benefits system are owned and delivered by different governments; understanding the implications of these interactions – the potential for cliff edges or disincentives to employment for example – will be important.   

Currently, Scotland is the only part of the UK with this system.  For policy makers, differentiation of policy creates a precious opportunity to find out what works, to learn from the experience of implementation and to better understand how best to create the changes we want.  There are other ways to learn of course as well. Randomized Controlled Trials (RCT) are often seen as the gold standard.

NESTA (full disclosure, I am a Trustee) is considering the value of RCTs in this area and also keen to look at what we can learn from Scotland Welfare reimagined: could cash transfers combat child poverty? | Nesta.

We only learn if we invest explicitly in learning - putting in place the impact evaluations, gathering the data, quantitative and qualitative, listening to the stories, testing out our assumptions, doing high quality research.   Few policies work in practice exactly as we intended at the design stage – and sometimes they don’t work at all to produce the change expected.  They can evolve and improve based on experience.  

At a recent event in Edinburgh, Prof Danny Dorling described the Scottish Child Payment as the single policy intervention that has created the largest fall in child poverty anywhere in Europe for at least 40 years.  

Impartiality runs deep in the soul of a longtime civil servant so I am not writing this paper as an advocate of the Scottish Child Payment, important though it will be to the many thousands who receive it, but as a call for us all to invest in learning about what works in tackling child poverty and inequality and to debate these issues throughout the UK with evidence, humility and an open mind. 

Ends

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Why is DHI thinking about the Scottish Child Payment?

We heard at our recent event with Professor Danny Dorling about how rising poverty and inequality is shattering our nation. We know from our Understanding Scotland Economy Tracker that at least 1 in 4 people are consistently affected by financial stress which is affecting their sleep and nutrition.

Beyond heart-breaking individual stories, poverty results in significant intergenerational consequences for the labour market and public spending especially through long term health conditions.  As pressures rise on public spending, this is the biggest move yet by the Scottish Government to get up-stream and move towards a preventative agenda as laid out by the Christie Commission.

Blog: The lifeblood of our economy is in peril

5th December 2022

Guest blog from Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflecting on the latest Understanding Scotland economy insights and what they means for the arts, culture and society.

Shona wants to see more people supporting and advocating for the arts. Here she explains what we stand to lose if the sector is not better protected during these turbulent economic times.

Photo: Edinburgh Festival Fringe Society, Andrew Downie 2018

In hard economic times it often feels as if people think investment in the arts is an unaffordable luxury.  Our sector is almost always the first to experience disinvestment in times of crisis but often the first to be looked to when thoughts turn to rebuilding hope, optimism, prosperity.  The Edinburgh Festivals are a fine example of this belief in the power of the arts to boost the national mood and forge cultural links internationally. They were established, by the British Council amongst others, to heal the human spirit and reconnect people across Europe, after the horrors of the second world war.

A thriving and inclusive creative sector is not a luxury or added extra in the UK, it is an essential part of the best of who and what we are, and is vital economically, socially, internationally, and culturally.

In 2019 the creative industries contributed £115.9bn in Gross Value Added (GVA)  to the UK economy. That’s 6% of the UK’s total GVA, more than the combined contribution of aerospace, automotive, life sciences and oil and gas and equivalent to 70% of the GVA generated by the financial and insurance sector.

Our sector also created jobs at three times the UK average employing two million people across the UK and supporting a further 1.4 million jobs across the supply chain. So the arts and creative industries are a route to opportunity, employment as well as life enhancement.

Our social and cultural contributions are similarly immense. Great strides have been made in recent years to address inequity in the arts and creative sector. We have worked hard to remove barriers to those who have historically found it most difficult to find a foothold or even aspire to a career in this field. There is still much to do in terms of where the arts are positioned in our schools and education system, to fully understand the transferable skills gained from early exposure to the arts that enhance employability, creative thinking and success in any sector.

We are known the world over for our cultural identities and freedom of speech and expression, for the innovation and originality of our voices in the arts. Creativity, whether expressed through music, literature, performance, visual art or other activities, forms our biggest soft power asset.

We cannot afford to lose these assets built over many years. Having just about survived two years of pandemic-related disruption, we have to face the evidence that audiences are not planning to return in sufficient numbers in 2023 to generate the income needed to cover all the costs that are rising so rapidly. There are no cultural recovery funds to draw on. Our sector is teetering on the edge and, therefore, risks becoming increasingly unappealing as a career choice.  Without support, belief, investment and recognition of our value, the arts sector is set to lose vital talent and skills in the short-term, and become the privilege of only those who can afford it as either practitioners or audience members for the longer-term.

We underestimate the value of our creative output and the sophistication of our artistic expression at our peril. The Edinburgh Fringe is located here but this is not an issue just for Edinburgh or even just for Scotland.  The Fringe is a global marketplace for the whole of the UK, bringing some 63 countries to our stages as well as programmers, curators and screen commissioners from around the world to source new talent and work.

The Fringe is not like any other festival. It is to the performing arts what Venice Biennale is to visual arts, Cannes to film, and South by Southwest is to music. It has been going for 75 years, and with our sister summer festivals, our combined ticket sales are on a par with the Fifa world cup or an Olympic Games, but happen every single year, with nothing close to the investment.

So this is a plea for support. The creative and cultural sector is a critical part of our economy, but more importantly says more about who we are as people, than any other sector. If there is anything you can do to advocate, champion or directly invest in our cause, it would be very much appreciated.

 ENDS

 Link for further information on the Edinburgh Festival Fringe Society 

Press release: New research finds risk overload

28th September 2022

Risk overload and a deep lack of trust are storing up future financial problems, new research finds:

We have become a nation of overburdened sceptics when it comes to managing our financial wellbeing, which is storing up massive issues for the future, according to a new study by the David Hume Institute. 

As few as one in ten (11%) “entirely trust” the UK Government when it comes to getting advice or guidance on financial matters – with levels of trust in the Scottish Government faring no better.  Only two in ten (21%) trusted “companies which provide financial products such as pensions” as a source of information.

Through a series of one-to-one online interviews, group discussions and a commissioned survey of over 1000 people living in Scotland, the research also found that 36% of people surveyed said they did not know who they could trust for advice or guidance. Of particular concern were those immediately affected by recent pension reforms, with 28% of over 65s and 32% of those aged 55 to 64 stating they did not know who to trust. 

Following a clear shift in responsibility for financial security from government and institutions to the individual, another 32% did not know what advice or guidance could help them.

Sources of advice which were praised in one-to-one interviews for their quality, trustworthiness and independence included Martin Lewis and Citizens Advice Bureau, while over half (52%) in the survey identified family and friends as their source of reliable information.

However, the study, The Great Risk Transfer, also found that stress, fear, stigma and embarrassment were holding back many people from seeking guidance and undermining their ability to absorb relevant information about the matters that affect their wellbeing, be that pensions, insurance, future health provision, housing or employment.

Consequently, the report concludes that financial risks are intensifying, creating an unfair and increasing burden on the individual. Government policy built on the premise that more choice is always good now needs to be reviewed: many people do not have more choice, just much more risk and less of a safety net should things go wrong in their lives.

Commenting on the study’s findings, Susan Murray, Director of the David Hume Institute, said:

“Trust is clearly a barrier to seeking advice but there are also other cultural and emotional factors at play, including stress and embarrassment and lack of knowledge that stop people from dealing with the financial risks that impact their lives. 

“The research highlights how governments and employers have shifted the burden of financial risk increasingly to the individual who is expected to understand and manage the many choices they face when it comes to pensions, health, housing and employment. Yet in reality, circumstances can not only limit choice but can also mean that many do not know the myriad of decisions they have to make. Indeed, a good choice today could easily be a bad choice tomorrow and without government safety nets, a huge problem awaits us all in the not-so-distant future unless we begin now to talk more openly about money and re-evaluate where the burden of risk is falling.”

“Many of the participants in the research described the barriers but most expressed a strong desire for improved access to relevant information and guidance. Trust in non-profit sector providers, especially Citizens Advice Bureau, was significantly higher than the most trusted financial services providers. So, while the answer is not simply more information, long-term stable funding for the most trusted providers must clearly be a strategic priority if the goal is to better equip people to manage financial risk.”

The research was commissioned by the Institute and Faculty of Actuaries (IFoA). Nicholas Chadha, who is part of the Scottish Board of the IFoA, said:

“This is a powerful independent report from the David Hume Institute based on rich research and compelling individual testimony. While primarily based on evidence from Scotland, the challenging recommendations clearly have wider application and resonance.  As part of our public interest commitment, we look forward to a vigorous debate on the findings at a time when the challenge to individuals and communities to understand and calibrate risk is so vital to their financial wellbeing.”

ENDS

Watch the recording of the research launch event:

Notes to Editors:

• The Great Risk Transfer: have we got the balance right? was part-funded by the Institute and Faculty of Actuaries Scottish Board Endowment Fund.